Swiss Re, a leading global reinsurer, has announced a strategic investment partnership with GAM, a prominent asset management firm, which will take effect on May 7, 2025. This collaboration will see Swiss Re's subsidiary, Swiss Re Insurance-Linked Investment Advisors Corporation (SRILIAC), acting as the co-investment manager for GAM's Insurance-Linked Securities (ILS) fund range, including the GAM Star Cat Bond UCITS Fund.
As of March 31, 2025, Swiss Re managed approximately USD 5 billion in ILS assets, which encompass various funds, sidecars, and tailored structures. Meanwhile, GAM's ILS funds had around USD 3 billion in assets under management at the same date. Under the new arrangement, Swiss Re will be responsible for all investment and portfolio management decisions, while GAM will maintain oversight of risk management and will lead global distribution and product structuring.
Both firms are also set to collaborate on innovations in the ILS sector. To facilitate this strategic partnership, GAM has appointed Rom Aviv as the Head of ILS, tasked with driving the expansion of the ILS business and coordinating the collaboration with Swiss Re.
Swiss Re has a long-standing history in the insurance-linked securities market, having pioneered catastrophe bonds (Cat Bonds) since the market's inception in the 1990s. The company has arranged transactions with a nominal value of around USD 50 billion, representing over a quarter of the total nominal value of all Cat Bonds issued since 1997. This extensive experience positions Swiss Re as a leader in the sector, providing significant expertise in risk assessment and underwriting.
Mariagiovanna Guatteri, the CEO and CIO of SRILIAC, expressed enthusiasm about the partnership, noting, "The ILS market set new records in 2024, and the strong returns from Cat Bonds have clearly demonstrated the attractiveness and diversification value of this asset class for investors. It is an exciting time for the industry, and we see considerable interest from both Cat Bond issuers and investors."
Cat Bonds serve as financial instruments designed to provide protection against potential losses from natural disasters or other hazards. They allow investors access to an asset class whose returns exhibit low correlation with other financial market asset classes, making them a valuable tool for portfolio diversification.
Christopher Minter, Head of Swiss Re Alternative Capital Partners, commented on the partnership, stating, "We are very excited about the partnership with GAM to jointly manage their Cat Bond and ILS investment strategies. Through our collaboration with GAM, we will share Swiss Re's unique risk knowledge and experience in the Cat Bond industry with investors."
Despite the promising partnership, the stock market reacted differently to the news. Swiss Re's shares saw a decline of 7.37%, trading at 128.48 Swiss francs, while GAM's shares gained 2.16%, reaching 0.09 Swiss francs. This reflects the current market environment, which has been challenging for many companies.
The ILS market has been experiencing significant growth, driven by rising demand for risk transfer solutions. This demand is largely fueled by economic development, the concentration of insured values in exposed areas, changing vulnerabilities, and the impacts of climate change. Investors are increasingly looking for scalable and diversifying investment opportunities, and the ILS market is well-positioned to meet these needs.
In conclusion, the partnership between Swiss Re and GAM marks a significant development in the realm of insurance-linked securities. By leveraging Swiss Re's extensive expertise in the Cat Bond market and GAM's established presence in asset management, both companies aim to create innovative investment solutions that cater to the evolving needs of investors.
